Coalition Government Unveils Tax Breaks On Foreign Investment

by Mary Swire, Tax-News.com, Hong Kong

17 October 2001

In a last minute bid to woo voters, Australia's ruling coalition government has unveiled tax breaks to attract foreign investment just a few weeks before the November 10 national election.

Prime Minister, John Howard, has said that he would introduce the tax breaks in addition to creating an investment promotion agency as part of a new strategy to soothe recent fears raised by the business sector over dwindling foreign investment.

Plans include extending the capital gains tax exemption (already enjoyed by foreign pension funds) to endowment funds and private investors who hold up to 10 per cent of a venture capital limited partnership. However, from July 2002, the measure will exclude activities such as property development, retailing and several financial services from eligibility for venture-capital concessions.

The Prime Minister also revealed plans to ease the burden of income and capital gains tax for foreign expatriates residing in Australia, and a review of the Trade Practices Act will be conducted in response to business fears that the ban on mergers for Australian companies prevents them from competing on a worldwide basis.

'Australian businesses both large and small need to be assured that legislation and administrative practice will not act against continued growth and productivity,' said Mr Howard.

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